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East Europe balks at helping indebted richer West

By Vanessa Gera

Associated Press

Published: Wednesday, Dec. 14 2011 7:31 a.m. MST

People sell used items on a street in Warsaw, Poland, Wednesday, Dec. 14, 2011. Poland still faces many economic problems despite strong growth since in joined the European Union in 2004. People across central and eastern Europe are balking at a request that they provide loans to the International Monetary Fund to help indebted countries using the euro. Many argue that they should not have to sacrifice to help people in the West, who enjoy a much higher standard of living even though their states are crushed by mountains of debt.

Alik Keplicz) - POLAND OUT -, Associated Press

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WARSAW, Poland — Of all the twists in Europe's debt crisis one of the oddest must be this: Poles, Czechs and other eastern Europeans, long the recipients of massive amounts of Western aid, are being asked to contribute to an emergency fund for indebted Western European states.

That plan, decided at a European Union summit Friday, is sparking resistance — and some outrage — from eastern Europeans who see a huge injustice in being asked to sacrifice for countries that still enjoy much greater wealth, even with mountains of state debt.

Czech and Slovak leaders have spoken out against the plan — sentiment also being voiced in more emotional language by people across the region.

"This must be some kind of bad joke," said Jonas Vaicys, a math teacher in Lithuania, an ex-Soviet state still recovering from a huge hit taken in the financial crisis of 2008-09. "Lithuania itself is on the verge of asking for international help, not donating money to some fund."

The plan is one of several measures that EU leaders agreed to as they struggle to pull Europe out of its debt crisis. It involves EU members providing up to €200 billion in loans to the International Monetary Fund to empower it to bail out indebted states. The bulk would come from eurozone members, but even those members who don't use the shared currency are being asked for help.

Hungary and Romania won't contribute because they are still paying the IMF back for past bailouts. And Bulgaria — the EU's poorest member — says its has nothing to offer.

But several other ex-communist countries now face an obligation to make reserves from their central banks available to the IMF as loans.

This marks quite a change for a part of Europe that has depended for years on Western aid to overcome the crippling economic legacy of communism. That their help is now sought signals just how far they have come after years of investment and high growth.

Some in this region argue that gratitude alone should prompt them to contribute to the fund without complaining.

But despite years of economic progress, the standard of living across central and eastern Europe still lags far behind the West, and many are loath to go along with the IMF plan.

Poland, for instance, has a debt load much lower than that of Greece and Italy — but this is also because the state simply doesn't provide the generous welfare benefits to its people that many take for granted in the West. Wages, jobless benefits and baby bonuses are all just a fraction of what they are in much of the West.

Now, asking these countries to spare funds for indebted eurozone members could create a popular backlash against any governments that contribute — especially as their own economies are already feeling the pain from the broader European crisis.

Czech Prime Minister Petr Necas said he is personally against contributing the roughly 90 billion koruna (€3.5 billion; $4.6 billion) his country has been asked for. But he also said more analysis is needed before his government reaches a decision.

"It's a serious situation and a very complicated financial problem," Necas said Tuesday. "A considerable amount of money is involved."

In Slovakia, Jozef Kollar, a leader of Freedom and Solidarity — a center-right party in the government — said he has an "overall negative" view of the plan. He called it a "weird transaction" pushed through by German and French leaders to get more money for an EU rescue fund without going through their parliaments.

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